India is testing new routes: Indian Oil buys oil from Colombia for the first time
31 December 21:30
India’s largest state-owned oil refiner , Indian Oil Corp (IOC), has purchased a shipment of oil from Colombia for the first time. It is about 2 million barrels of Castilla crude oil for delivery at the end of February. This was reported by Reuters with reference to informed sources, "Komersant Ukrainian" reports.
The purchase was made under an option contract with the state-owned Colombian company Ecopetrol, which provides for the possibility of supplying up to 12 million barrels of oil – the equivalent of six large tankers.
This step signals India’s attempts to diversify its oil supply sources
The move signals India’s attempts to diversify its oil supply amid growing risks to imports from Russia.
After the outbreak of Russia’s full-scale war against Ukraine, India became one of the key buyers of Russian oil, taking advantage of significant discounts. However, the tightening of US and EU sanctions, in particular on ships and logistics, complicates the stability of such supplies.
IOC traditionally covers the bulk of its oil needs from Russia and the Middle East
IOC traditionally covers the bulk of its oil needs from Russia and the Middle East. The company rarely buys South American grades, even though it has option agreements with Mexico, Brazil and Colombia.
According to Reuters, the key obstacle is the price: oil from South America usually loses out to Russian and Middle Eastern crude, especially when taking into account logistics.
That’s why option contracts have remained unrealized for years, despite regular renewals – in particular, the agreement with Ecopetrol has been in effect since 2021.
What is changing now
The market situation is forcing Indian refineries to reassess their risks. Tighter control over sanctions, restrictions on tankers and insurance increase the cost and uncertainty of Russian supplies.
In this context, the purchase of Colombian oil looks not so much like an economic decision as a strategic one – as a test of an alternative route in case of further disruptions.
